Art Market

5 Unspoken Rules of the Art Market New Collectors Need to Know

Chiara Zampetti Egidi
Aug 6, 2015 3:05PM

At auction, a work of art is always sold to the highest bidder, but in the primary art market money alone isn’t enough to secure the best pieces of the moment’s most popular artists. The possibility of purchasing those works is offered as a privilege only to collectors who have garnered a good reputation in the contemporary art world. How do you break into that set? We spoke to leading art-market players to compile a shortlist of the (sometimes unspoken) rules that govern the art market.

The Armory Show 2015. Photo by Christophe Tedjasukmana for Artsy.

01  Don’t make investment your top priority

Galleries appreciate collectors who are interested in and want to talk about a work’s content and historical relevance, not the possibility of a financial return on investment. While collectors’ desire to buy pieces that will hold their value in the long term is understood, speculation is not well regarded in the art world.

A responsible gallerist is very careful to whom he or she sells, says Annette Hofmann, international director of Lisson Gallery: “It is crucial to say no when you know that the collector wants to buy just for investment. Our task is to protect the artists and to make sure the works find a good, serious collection.”

02  Do not resell work

A gallery prefers buyers who keep the works in their collection for the long term. In the unfortunate case that a collector really needs to resell, the unwritten art market code is for the work to be brought back to the gallery from which it was purchased. The collector is free to sell the work privately or at auction, only if the original gallerist does not show an interest in buying it back or reselling it. There are gallerists who are pleased to resell the same works many times and make profits along the way. But there are others whose aim is to place the work only in prestigious and relevant collections—ideally forever.

Johann König of Berlin’s KÖNIG GALERIE explains why he is not interested in reselling pieces: “What is currently happening—and this is happening with younger and younger artists—is that the secondary market has an influence on the primary market. We now can find ourselves in a situation with a young artist who sells for more at auction than the prices we ask in the gallery. We don’t want to change the price [following] increases in auction prices too much, because if we do, we help create speculation. Collecting should not be based on the idea of gaining profit. [But], if a collector can buy a painting from a gallery for $35,000 and put it at auction shortly thereafter and get $50,000, it creates a lot of buyers who are only interested in buying and selling.”

03  Museums come first

Having works enter a museum collection is the aim of any artist and perhaps the most influential form of validation. This is why museums always have the priority on the waiting list of a responsible gallerist, even if they often pay discounted prices. König confirms: “My main target is always to sell to public institutions. Of course they have less money, but they enhance the reputation of the artist and the gallery. I could make much more money selling to private collectors, but I prefer to place the works in a public collection to stabilize the reputation of the artist in the long term.”

In the end, König points out, this results in a long-term gain: “We decide to raise the price of an artist for two main factors: one is demand, the second is an increase in respect from an art historical point of view. The more we sell to institutions, the more relevant the artist comes to be from an art historical perspective, and the more expensive they become.”

04  Build relationships

It is not possible to build a quality collection without building personal relationships with other art market players, especially gallerists. Neil Wenman, senior director of Hauser & Wirth in London, notes that working closely with his collectors is one of the best parts of the job. “There is an immense joy in building a collection together and looking at which artists and which specific works can create new meaning, [even] helping to acquire works from other sources and advising on acquisitions,” says Wenman. “Over the years both our tastes and opinions change, sometimes challenging a preconception, sometimes strengthening a line of thought. It’s a shared journey. Whether visiting artists’ studios in Shanghai, Los Angeles, New York, or Buenos Aires, or attending biennales or art fairs around the world, these are great shared experiences, which are often referred back to in conversation.”

He adds that the experience shouldn’t be confined to gallerist and collector: “I encourage artists and collectors to form a relationship and get to know each other, become friends. It’s important that one can begin to see the world through someone else’s eyes.”

05  Sit on the board of a museum—or build your own

A collector who is committed to an institution will usually have access to artworks before someone who has no museum affiliation. Collectors should have some kind of institutional affiliation to show a commitment to the art world beyond their private holdings—like being on the board of a museum or on the board of a nonprofit space—as showing interest in charitable contribution is well regarded in the art world. “I think when collecting, it’s great to have a sense of the bigger picture and this is something that a relationship with an institution can offer,” explains Wenman. “Being part of a committee or patron group can broaden one’s knowledge and give a foundation on which to focus one’s interest and collecting habits.” Also, for those with the means, opening a private collection to the public or creating a private museum can significantly increase a collector’s status.

Chiara Zampetti Egidi

Chiara Zampetti Egidi is the author of “Guida al Mercato dell’Arte Moderna e Contemporanea” (Skira 2014).